Land Use Law
It is an annual charge rate expressed as a percentage of the assessed market value of the property and empowers the state government to vary between owner-occupied property and other property, as well as residential property and commercial or revenue generating property. This variation further includes property for physically-challenged persons and those who have been resident at the same location for at least 12 years, minors; retiree owners of property and occupiers on the one hand, and active owners and occupiers on the other. According to the Law, the annual charge rate to be applied to eligible property in Lagos State shall be as follows: owner-occupied residential property – 0.076 per cent per annum of the assessed property value, and owner-occupied pensioner’s property. Exempted from from the Law are the state owned property, while chargeable property include industrial premises of manufacturing concerns at the rate of 0.256 per cent per annum of the assessed property value, residential property (owner and third party) at the rate of 0.256 per cent per annum of the assessed property value, residential property (without owner in residence) at the rate of 0.76 per cent per annum of the assessed property value, commercial property (used by occupier for business purposes) at the rate of 0.76 per cent per annum of the assessed property value and vacant property and open empty land at the rate of 0.76 per cent per annum of the assessed property value. The Law also provides various forms of reliefs that are available to payers of LUC. The reliefs include general relief of 40 per cent (applicable to all property liable to pay LUC), and specific reliefs applicable to property owners and leases of 10 years and above for pensioners (60 years and above) which is 100 per cent for owner-occupied property, persons with disability 10 per cent for owner-occupied property. Others include aged persons (70 years and above) 10 per cent for owner-occupied property, age of property 10 per cent for property aged 25 years and above, long occupation by owners five per cent for 12 years and above, federal and other state government property 20 per cent for non-revenue generating property, partial relief under the LUC Law – 20 per cent for non-profit-making organizations. To enjoy the available reliefs, payers will need to provide relevant documentary evidence to support their relief claims. All LUC paid within 15 days of receipt of Demand Notice will enjoy a timely payment discount of 15 per cent.
Property Identification Officers (PIO)
The minimum LUC payable on any given property shall not be less than N5,000 irrespective of any LUC relief granted on the property. The Commissioner for Finance is empowered to appoint Property Identification Officers, Professional Valuers and other persons as may be considered necessary for the purpose of assessing the charge applicable to a property. Category of property exempted from LUC includes property owned and occupied by a religious body and used exclusively as a place of worship or religious education, public cemeteries and burial grounds, property used as a registered educational institution certified by the commissioner to be non-profit making, property used as public library or as a private library certified by the commissioner to be non-profit making; any property specifically exempted by the governor by notice published in the State Official Gazette, and all palaces of recognized Obas and Chiefs in the state.
However, if any of the exempted property is leased out to private entities for revenue generation, it shall forfeit its exemption status as contemplated under the provisions of this Law. What are the offences and penalties? Any person who refuses or neglects to comply with any provision of this Law when required to do so by the Property Identification Officer or an assessor; any person who prevents, hinders, or obstructs any Property Identification Officer or an assessor in the course of lawful duty or anyone who removes, damages or destroys a Property Identification plaque on any property or building, commits an offence and shall be liable on conviction to a maximum fine of two hundred and fifty thousand naira only (N250,000) or to a maximum term of imprisonment for a period of three months or both. Any person who incites another person to refuse to pay LUC; or b) incites or assists any person to misrepresent in any way the person’s chargeable property; commits an offence and shall on summary conviction be liable to a maximum fine of two hundred and fifty thousand naira only (N250,000) or to a maximum term of imprisonment for a period of three months or both.
Assessment appeal tribunal
The new LUC Law has equally established an Assessment Appeal Tribunal in each division of the state to treat all appeals and resolve any potential dispute. Each tribunal shall consist of a chairman who shall be a legal practitioner of not less than 15 years post-call experience, a representative of the Attorney-Generalof the state, a registered town planner, a registered land surveyor, a registered estate surveyor and valuer, a representative of the Lagos State Valuation Office, a person with cognate experience in accounting and taxation, and two persons from the private sector. A person may make an appeal to the tribunal if aggrieved by a decision that the property which the person owns is a chargeable property, or that the person is liable to pay LUC in respect of such property, or any calculation of an amount which the person is liable to pay as LUC, and the Tribunal shall make such decision as it deems fit. In resolving disputes arising from the provisions of the Law, the parties shall submit to a confidential mediation in an effort to resolve such disputes. However, where the mediation does not resolve the dispute within 45 working days of the first session or when the mediator declares an impasse, the mediation shall be deemed inconclusive and parties shall be at liberty to resolve their dispute formally at the tribunal or through any other lawful means.
Making clarifications on the Law in an interactive session with property journalists last week, Lagos State Commissioner for Finance, Mr. Akinyemi Ashade, said said the government has extended the period for tax payers to enjoy the 15 per cent discount in the reviewed Land Use Charge Law to April 14, 2018 to enable the implementation and enforcement of the new law, as well as allow many property owners to benefit from the discount. Ashade who took time to clarify reactions on the new law, said under the old law, which had not been reviewed for over 15 years since 2001, the Land Use Charge rate was totally inaccurate and retrogressive and was depriving the State of keeping track of all economic activities that relate to land in Lagos State. He said the Law, which was reviewed by the Lagos State House of Assembly and signed into Law by the State Governor, Mr. Akinwunmi Ambode, on February 8, 2018 has merged all property and land based rates and charges in the State. Ashade said: “There was an urgent need for the repeal, as the old law had not been reviewed for over 15 years, since 2001. Under the old law, the LUC rate was totally inaccurate and retrogressive. This deprived the State of ability to keep track of all economic activities that relate to land in Lagos State. “The new law is a consolidation of ground rent, tenement rate, and neighbourhood improvement levy. This charge is payable annually in respect of all real estate properties in the State, which means owners and occupiers holding a lease to a property for 10 years or more are now liable to pay the annual LUC invoice charged. Land Use Charge: Mr. Gbenga Adeyinka, popular Nigerian comedian and Lagos property owner (right) being presented with his Land Use Charge receipt by the Branch Manager, Guaranty Trust Bank (GTB), Opebi branch, Mrs. Idowu Sadipe (left) at the Bank’s branch in Opebi, Ikeja, on Tuesday. “Thus, the tenement rates law, the land based rates law, the neighbourhood improvement charge and all other similar property rates or charges, laws or amendments to any such property Laws shall cease to apply to any property in Lagos State as from 2018. Nonetheless, all pending invoices, orders, rules, regulations, etc. under the 2001 repealed Law shall continue to be in effect until such obligations are discharged.” Explaining the calculation of amount payable, the commissioner said that property owners can determine the amount by multiplying the market value of their property by the Applicable Relief Rate of 40 per cent and Annual Charge rate. “Upon receiving a notice or not, the new law has made it possible for owners to calculate their charge, and enable prompt payment, which allows them to benefit from a 15 per cent discount for early payment, applicable to payments made within 15 days of receipt of Demand Notice,” he said. Responding to fears of tenants that the new Law might force landlords to increase rent, Ashade said aside the fact that the Lagos State Tenancy Law 2011 was still in force, the incidence of payment for Land Use Charge under the new law is on the landlord and not the tenant. He said the minimum rate was only increased from N1,200 it was in 2001 to N5,000, while there is provision for self-assessment and Assessment Appeal Tribunal under the new law. On vacant properties, Ashade said such would be treated based on owner-occupier and not as a commercial property, explaining that the target of government is to make commercial property owners to pay a little bit more.